The Economy Crushed the Democrats—And It Will Again in 2016 If They Don't Shape Up

November 5, 2014

I have heard several Democrats express befuddlement about the outcome of yesterday’s election. How could Barack Obama and the Democrats lose with employment rising and the stock market soaring? MSNBC’s Rachel Maddow quoted David Letterman’s monologue to this effect.

This is what happens when we have the midterm elections. The Republicans, of course, have turned against Obama, and the Democrats have also turned against Obama … Take a look at this: gas under $3 a gallon—under $3 a gallon. Unemployment under 6 percent, whoever thought? Stock market breaking records every day. No wonder the guy is so unpopular.

This line of reasoning usually ends with the conclusion that the economy wasn’t really the issue—it was ISIS or Ebola or, in the case of white working class voters, the president’s race. Or it ends with the conclusion that voters are simply deluded. I think this is the wrong way to understand what happened yesterday.

Voters were upset about ISIS and Ebola, but the election was still primarily about the economy, especially in the closely contested states, where Democrats lost or almost lost senate seats. In Colorado, Arkansas, and Virginia, for instance, twice as many voters picked the economy as the main issue over foreign policy, immigration, or health care. In those states, a large majority of voters said they were very or somewhat worried about the economy—82 percent in Virginia, 80 percent in Arkansas, and 65 percent in Colorado. These voters favored the Republican challengers by wide margins. In Arkansas, voters worried about the economy favored Republican Tom Cotton by 67 to 21. In Virginia, they favored Ed Gillespie by 58 to 40 percent.

Were these voters deluded? Isn’t the economy on the rise? If you look at economic growth figures, employment, stock averages, and corporate profits, that is certainly the case. But wages have failed to rise, and wealth for the lower half (which largely consists of home values and savings) is also stuck at Great Recession levels. Wage rates for hourly workers are still below what they were in 2007. Labor participation is still low, meaning many workers who don’t count as unemployed are simply not looking for work. According to Valerie Wilson of the Economic Policy Institute, median home values for whites have declined 20.3 percent since 2007, 37.7 percent for African Americans, and 25.8 percent for Latinos.

As a result, even someone who has a job is likely to feel insecure and anxious, and to worry that the economy could go down again, and throw them out of work. Or these voters become concerned with taxes, which they see as eating away from their stagnant income. That was clearly a factor in the Maryland governor’s race, where voters, angry about tax increases in Martin O’Malley’s administration, chose Republican Larry Hogan over O’Malley’s handpicked successor.

There is an obvious historical analogy with this year’s election. In 1994, employment was also rising. The unemployment rate would go from 6.9 to 6.1 percent from 1993. And among higher circles, there was much rejoicing about the recovery. In February 1994, the New York Timesheadlined a story, “The American Economy, Back on Top.” But as was true this year, the economy had not entirely recovered from the recession of 1991. Between 1989 and 1994, an EPI study showed, there had been “a continuous decline in real wages among the bottom 80 percent of men.” And in the 1994 election, voters, led by a white working class concerned about a failing economy, repudiated Bill Clinton and the Democrats. Republicans won the House and Senate for the first time since 1952. I believe something very similar happened in yesterday’s election.

Democrats have been able to retain the loyalty of African-American and of many Latino voters during these downturns, but not white working class voters. They form the bulk of the voters who think the economy is getting worse and who vote for Republicans and Democrats. They are populists in sentiment. According to a Washington Postpoll before the election, 72 percent of whites who had not graduated from college agreed and only 20 percent disagreed that the American economic system “generally favors the wealthy.” From pre-election polls, Daily Kos’s elections guide produced a table showing the margins in different states by which voters agreed that the U.S. system favors the wealthy. Voters in Kansas, Arkansas, Louisiana, Kentucky, West Virginia, Iowa, Virginia, Colorado, Ohio, Wisconsin, and Alaska agreed rather than disagreed by 30 or more points. Those are all states where white working class voters shared these sentiments, but opted for Republicans.

Democrats will not be able to reach some of these voters without abandoning their commitment to gun control, abortion rights, or the reduction in CO2 emissions. West Virginia, once a bastion of Democratic populism, may be out of reach. But many of the other states are not, and some of these are states that Democrats must win in presidential elections. After 1994, Bill Clinton learned to speak to these voters. Obama always had a difficult time. He did sufficiently well in 2008 and 2012 in states like Ohio because of whom he was running against. By November 2008, many voters doubted John McCain had the knowledge to grapple with the coming recession. In November 2012, Mitt Romney provided a perfect foil for Obama to present himself as a friend of the middle class and a foe of economic inequality. But in 2010 and 2014, the Democrats have taken their eye off of the white working class. They have either focused on the poorest workers of all by pressing for an increase in the minimum wage—a worthy objective but insufficient to reach the white working class—or ignored economic issues. If they make that mistake again in 2016, the Republicans will be able to maintain control of Congress and add, perhaps, add the White House.